Select Committee on Environmental Audit Minutes of Evidence


Examination of Witnesses (Questions 80 - 93)

TUESDAY 30 NOVEMBER 1999

DR PAUL LEINSTER, MR RONAN PALMER AND MR STEVE KILLEEN

  80. Are you tending towards a sort of lower level type of tax to fund this work to change practice, rather than a hard-hitting tax which seems to knock demand right out?
  (Dr Leinster) Yes.

  81. You are thinking of the former.
  (Dr Leinster) Yes, the former.

Chairman

  82. I am not quite clear about your position on that. You said just a few moments ago that you were in favour of a banded tax.
  (Dr Leinster) Yes.

  83. Yet you also appear to be saying now that you are in favour of a low level uniform tax.
  (Dr Leinster) No, I did not say that. We said a tax which was used to educate, not necessarily a high level of tax, but you can still have a banded tax within that regime.

  84. That seems to get the worst of both worlds. If you have a low level tax which is also banded, the bands have to be small distances apart, the bands are going to be very narrow. As I understood the argument—and maybe I have got it wrong—it is that there is an argument between on the one hand a fairly comprehensive tax, which is banded and complicated and so forth, and on the other hand a rather low level, by definition rather flattish tax which is hypothecated.
  (Mr Palmer) May I suggest that we actually see this as something we are into for the long term? I noted you asked some of the earlier people giving evidence about how long it might take to develop such a tax, which is a very fair point. We certainly see that introducing a fairly simple tax which would ideally be banded and it might be a much simpler banding system than that proposed by ECOTEC, at a low level, is a way into this route. We see this tax as part of a programme of work which includes the kind of improvement of our monitoring that Mr Killeen mentioned a few moments ago, improving the information base and the education base available to the agriculture industry and to other sectors which use pesticides. That would be consistent with starting at a low level and monitoring and reviewing how the tax is actually helping.

  85. That means you are abandoning the objective of influencing behaviour directly by the high level of the tax. You are settling for a low level tax which is hypothecated and therefore funds research and training which can have an indirect effect.
  (Mr Palmer) It is very difficult to argue precisely about the actual direct effect of the tax. We heard a lot of discussion earlier today about elasticities and uncertainty about elasticities. Certainly, yes, I could probably accept that the short-term elasticities are very limited and therefore some idea that a high tax is going to result in a major change in behaviour, may not be most effective. That is not to say that there would not be long-term elasticities so that over time one would see the agricultural sector, say, working to develop new techniques which reduced their inputs of pesticides or introducing capital solutions which might protect, say, against accidental spillages, which is an issue in itself.

  86. Did I get a feeling from Dr Leinster's comments that because you were replacing charges which you regard as inefficient, this was the more efficient way of doing what is being done at the moment? Would that be fair?
  (Dr Leinster) There are different mechanisms at play here. In terms of the herbicide and also maybe local authority use of these materials, then you have an issue of diffuse pollution which you are trying to control, which we need to understand more about, which we need to define how we best control it. So you have a tax which is similar to the charge for discharge system that we have for point source discharges, which funds base level work of monitoring research, education. That would be one aspect of it. You have a separate issue, which is to do with how you deal with the particular issue of sheep dip chemicals where you have thousands of small users and how it is best to raise the revenue from that discrete group of users. There are two different ways of using the similar sort of instrument.

  87. This tax seems to disappear every time I try to get my hands round it. It is complicated, it is simple, it is low level, it is high level, it is hypothecated, it is not. We are in a very difficult area. While no doubt I am sure that the biodiversity trends are very alarming, are you really convinced that a tax is an appropriate thing to go for in the near future, in the next year or two?
  (Dr Leinster) We believe that for the reasons we gave you can send clear signals by using a banded tax. If you use a banded tax it does not need to be the scheme which is outlined within the report, it could be simpler than that. You can send clear messages that one type of material is better than another type of material or is less harmful than another type of material. You can actually signal messages which then make people make conscious decisions about what to use in a particular situation. You can do that. There is a need to understand the whole question of pesticides and the environment better and we need some form of funding for that. On the polluter-pays principle, then the users of those materials could be charged so that we can raise the funds to understand those issues. Within that hypothecation is important for those reasons to fund this work. There is then a separate issue but still a tax related issue to do with pesticides associated with what is the best mechanism for raising charges so that we get adequate control of the ground water issues associated with the use of sheep dip chemicals.

Mr Blizzard

  88. Is there not a European-wide issue here though as well? Unless we take some measures across the European Union, do we not then just end up importing food which has been produced in an environmentally unfriendly way in another country because they are not taking on the extra costs that we are seeking to put on our own producers?
  (Mr Palmer) There is indeed such a question as speakers earlier have said. Of course pesticide taxes have been introduced in a number of other Member States and indeed with the potential addition of France come next year. Secondly, the type of directives which we are actually monitoring for and testing against will also apply in other European countries so that similar pressures will be placed on other European countries to deal with these issues. We believe that that puts an onus on us in this country to apply these in as efficient a manner as possible. That is where the notion of the economic instrument comes in and may contribute to that efficiency, so helping to counter the kind of undesirable result of effectively pushing the pollution somewhere else and also reducing the actual economic output here at the same time.

Mr Jones

  89. Coming through from all the contributors this morning we have certainly heard that there is a lack of reliable information from which we can base what the effects of pesticides on biodiversity are. That has come through in each of the three sets of contributions. That would strengthen your argument for more research and on the basis of the polluter-pays principle then there is a logic to extracting that money in one way or another, whether it is taxation or charging from the users of the pesticide. That is setting aside any effective taxation on altering the way people behave. Then, when we want to talk about whether the tax level should be low or high, if it is to fund this research, do we not need to know how much money is required for how much research in order to understand what the tax level should be? I have not seen any numbers produced. What about the water consumer? We have heard in the last contribution that several hundred water consumers are apparently paying several hundred million pounds per year to clear up pesticides. If that is going to come out of any polluter-pays principle then the level of taxation, nothing to do with affecting behaviour, would be fairly high I should imagine. Has anyone worked out any of the figures?
  (Mr Killeen) To answer your initial point in terms of giving some sort of indication of how much research is needed, you are right, that a lot of our monitoring has to be targeted at the aquatic environment, but it has not been geared specifically to target impacts of pesticides. What we have tried to do is establish collaborative forum with other organisations which do monitor the impact of pesticides. What we are attempting to do is pull information together in a report early next year which will actually paint a much better picture because the Agency only comprise part of that picture. I am confident out of that picture will emerge some better insight as to what still needs to be done to assess overall the research needs, to assess the true impacts of pesticides from a wide variety of uses. That information will be forthcoming. Just to give some indication, we will probably spend in the order of half a million pounds a year on research related to pesticide-type activity. It is quite a substantial commitment already, yet there are still many questions to be asked and we cannot answer those questions in isolation.

  Mr Jones: What is the level of money that you require for your research?

Chairman

  90. Do not pitch too low.
  (Mr Palmer) May I pick up on your other point as well which is the question about water consumers paying? In the evidence we submitted to you previously we cited anecdotally the case of Wessex water who were spending in excess of £100 million on this. It is quite clearly desirable that one should make the polluter pay. It may of course be the case that water consumers will actually have to continue to pay for some time in order to clean up historical residues of past practice or to provide some kind of safety buffer against accident or anything like that happening which, because it would take time for new regulations, time for the tax, time for measures associated with the tax as part of that package, to take effect in the environment, is simply what one would expect in dealing with a problem like this.

Mr Grieve

  91. May I pick up that comment because it has not been much touched on and it takes us back really to the questions I was asking at the start. To what extent might you take the view—if there is no evidence about this just say so—that the current problem is that the use of pesticides has proceeded over such a prolonged period in this country, it is after all not exactly something new, that notwithstanding the apparent changes in pesticide weight which are taking place, the accumulation in the environment is such that that is the reason why you are not seeing any of the knockon consequences you expected in terms of reduction.
  (Mr Killeen) The major challenge we have is that the reality of the situation is that whilst we have good information about the levels in pesticides, we have no real indication as to the combined effects of those levels of pesticides and that is why we are concerned not to see a reduction of overall levels in the environment over a five-year period. The environmental load seems to be maintained, we know we do not have the systems in place to assess the impact by bringing together the expertise and data sets from other organisations, yet still things are not getting any better. We have no obvious solutions to deal with some of these problems.

Chairman

  92. Not only are they not getting any better, but they are getting quite a lot worse.
  (Mr Killeen) In terms of the actual levels in the environment and in terms of observed levels from diffuse pollution, they seem to be reasonably stable.

  93. I am thinking of biodiversity.
  (Mr Killeen) In terms of the number of compounds failing standards, we set quality standards as in Europe to protect the environment, each year we get more standards so there is more against which to compare those levels and they are dramatically increasing. Those standards provide surrogate protection until we have systems in the real environment to measure the true impacts. We are some way off that. To answer your question, millions and millions of pounds are required to deal with this issue.

  Chairman: We shall leave on that interesting note. Thank you very much indeed.





 
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